Canada's debt

[Topaz]

After watching question period today, I couldn't believe what I heard. The Libs said the Tories are /have a 125 BILLION deficit! This is what the Min.of Fin. met that he debt would be higher than thought? The PM stood up and didn't deny it but said it wasn't their fault blame on the "global recession". The Tories have the biggest government ever and I would like to see how much the government is spending and were its going! Generation X is the one going to have to pay this off and even though the PM said this is just a short term debt, I don't believe him unless he going to borrow money from China like the US! The problem is the Tory govt unemployment spending is up and paying into it, is down and next years income taxes revenues are going to be down. The Tories have a really mess on their hands and I don't think they know how to get out of it, even though they say they do but never say HOW??? When the better times come again no matter who is in power, taxes will have to go up, probably for the middle and upper class.

[August1991]

After watching question period today, I couldn't believe what I heard. The Libs said the Tories are /have a 125 BILLION deficit!

That number is hocus-pocus statistics. I think it's a projected cumulative deficit over the next five years.

The projected federal deficit this year was about $40 billion and this projection has recently been increased to $50 billion. Understandably, federal government revenues have fallen off a cliff while government expenditures have stayed constant or even risen. Even with a deficit of $50 billion, total federal debt will stay well below 50% of GDP.

Compare this to the US where Obama projects a federal deficit of $1.75 trillion (or over three times Canada's deficit on a per capita basis). US federal debt is about 60% of GDP and will possibly rise above 100% of GDP by then end of Obama's term in 2012.

[Battletoads]

"If you don't want a carbon tax and tax increases and a deficit and recession, the only way to ensure that is the case is to vote for the Conservative party."

"I know economists will say well, we could run a small deficit but the problem is that once you cross that line as we see in the United States, nothing stops deficits from getting larger and larger and spiralling out of control."

"We will not run a deficit."

- The conservative party of Canada

[daniel]

...This is what the Min.of Fin. met that he debt would be higher than thought? The PM stood up and didn't deny it but said it wasn't their fault blame on the "global recession"....

The only thing missing from their responses was a formal apology to the former Premier of Ontario, Bob Rae.

[jdobbin]

That number is hocus-pocus statistics. I think it's a projected cumulative deficit over the next five years.

So you saying it is not really a deficit and of no concern?

The projected federal deficit this year was about $40 billion and this projection has recently been increased to $50 billion. Understandably, federal government revenues have fallen off a cliff while government expenditures have stayed constant or even risen. Even with a deficit of $50 billion, total federal debt will stay well below 50% of GDP.

Yet Tory spending is not likely to subside and they have shown no plan about how they plan to end the deficit.

[geoffrey]

So you saying it is not really a deficit and of no concern?

I'd say so. Canada faces a huge infrastructure backlog, and this spending will certainly help alleviate that. Better to spend in depressed times than in boom times. It's actually quite effective.

The difference between Canada and the US in terms of deficits is that Canada is spending the money on long-lived assets... bridges, universities, roads, whatever. Financing long-lived assets makes sense, bare the cost over the life of the asset. Financing union salaries and pensions like Obama prefers to do is not an effective use of taxpayer indebtedness.

So that's what it comes down to Dobbin, what is the money spent on? I'll gladly have the CPC borrow funds to construct a bridge that will last 50 years. I will not support a government that gives billions to automakers and screws investors to just protect union jobs and pensions from getting reduced (even though most of our RRSPs declined, the union boys at GM get the same amount... huh.)

I disagreed with the governments of Ontario (Liberal) and Federally (Conservative) giving money to the auto companies. That was bad policy. The rest is ok. No issues with it really. I mean, ideally we'd just slash health care and social programs, but that doesn't fly in any country anymore. Doctor and nurse pay cuts to European levels? Hmm, theres an idea!

[jdobbin]

I'd say so. Canada faces a huge infrastructure backlog, and this spending will certainly help alleviate that. Better to spend in depressed times than in boom times. It's actually quite effective.

Except that Tories were spending like crazy even before the economy was down. Flagpoles are not infrastructure spending.

The difference between Canada and the US in terms of deficits is that Canada is spending the money on long-lived assets... bridges, universities, roads, whatever. Financing long-lived assets makes sense, bare the cost over the life of the asset. Financing union salaries and pensions like Obama prefers to do is not an effective use of taxpayer indebtedness.

Afraid that is not the only area the government is spending on in Canada.

So that's what it comes down to Dobbin, what is the money spent on? I'll gladly have the CPC borrow funds to construct a bridge that will last 50 years. I will not support a government that gives billions to automakers and screws investors to just protect union jobs and pensions from getting reduced (even though most of our RRSPs declined, the union boys at GM get the same amount... huh.)

Well, there's the rub. The Tories are doing both.

I disagreed with the governments of Ontario (Liberal) and Federally (Conservative) giving money to the auto companies. That was bad policy. The rest is ok. No issues with it really. I mean, ideally we'd just slash health care and social programs, but that doesn't fly in any country anymore. Doctor and nurse pay cuts to European levels? Hmm, theres an idea!

All programs need to be looked at for spending reductions. The Tories have shown that since 2006, they are only capable of spending.

[capricorn]

The Tories have shown that since 2006, they are only capable of spending.

< This is all part of Harper's perverse long term plan of destroying the Liberals. He will descend the country so deeply into debt that when the Liberals take over, they will be incapable of, as Ignatieff would say, "digging the car out of the ditch". Then, the electorate will deal the final blow. > sarcasm off

[jdobbin]

< This is all part of Harper's perverse long term plan of destroying the Liberals. He will descend the country so deeply into debt that when the Liberals take over, they will be incapable of, as Ignatieff would say, "digging the car out of the ditch". Then, the electorate will deal the final blow. > sarcasm off

And I thought it was the he would get Canada so in debt that it would default and Harper could end CPP, OAS and Medicare all while eating a big bowl of kittens.

[capricorn]

And I thought it was the he would get Canada so in debt that it would default and Harper could end CPP, OAS and Medicare all while eating a big bowl of kittens.

He would, of course, eat Ignatieff's kitten, not his own.

[jdobbin]

He would, of course, eat Ignatieff's kitten, not his own.

True. Harper's cat is complicit in luring other cats to the dinner table.

I forgot to add, eating a bowl of kittens prior to starting his new job as a FOX broadcaster in the U.S.

[capricorn]

I should point out that Ignatieff's pussy is of an exotic breed and considered a delicacy among pussy eaters. On the other hand, Harper's cats are of the Heinz 57 variety, the kind you'd find in a barnyard out west somewhere. Not so edible.

[capricorn]

True. Harper's cat is complicit in luring other cats to the dinner table.

Well there's a change. With the Liberals, it used to be luring other hogs to the trough.

[capricorn]

I disagreed with the governments of Ontario (Liberal) and Federally (Conservative) giving money to the auto companies. That was bad policy. The rest is ok. No issues with it really.

I agree with you geoffrey. Another thing, the news that the projected deficit was overshot by such a wide margin may discourage opposition parties and interest groups from demanding more spending. To do so would be frowned upon.

[jdobbin]

Well there's a change. With the Liberals, it used to be luring other hogs to the trough.

That's a terrible thing to say about the present Conservatives.

[capricorn]

I thought you'd like that.

[August1991]

So that's what it comes down to Dobbin, what is the money spent on? I'll gladly have the CPC borrow funds to construct a bridge that will last 50 years. I will not support a government that gives billions to automakers and screws investors to just protect union jobs and pensions from getting reduced (even though most of our RRSPs declined, the union boys at GM get the same amount... huh.)

I'm with Geoffrey here. We should be far more concerned with government spending (what government buys on our behalf) than about the deficit/surplus of the budget.

Governments spend other people's money and in the case of the Canadian government, it is spending the money of some very rich people. It can borrow and spend far beyond what it is doing now. The question rather is: should it?

< This is all part of Harper's perverse long term plan of destroying the Liberals. He will descend the country so deeply into debt that when the Liberals take over, they will be incapable of, as Ignatieff would say, "digging the car out of the ditch". Then, the electorate will deal the final blow. > sarcasm off

Don't laugh, Capricorn. Many on the US right under Bush adopted that exact policy. Since government deficits don't matter, Bush Jnr cut taxes to make future government spending untenable. Obama is about to face this political fact when he will probably have to raise taxes on the middle class.

Unless Obama raises the Democrat ante on the Republican mise and puts US federal government debt at Japanese levels of 190% of GDP.

----

In North America, government deficits and the level of government debt are a political issue. They serve to keep government spending in check. Civilized countries such as Japan and Belgium have greater government deficits and debts. Even governments in the US and Canada have borrowed far more than now.

IMV, this institution of the State is misunderstood. It spends other people's money. The budget of such an institution is not like a family budget. A wise family borrows carefully and always pays down its debts. The State doesn't operate like a family. It's a different institution.

Edited May 27, 2009 by August1991

[Argus]

So you saying it is not really a deficit and of no concern?

Yet Tory spending is not likely to subside and they have shown no plan about how they plan to end the deficit.

Nor has your party. I'm not happy about the deficit. I wasn't happy about the whole incentice spending thing either. But as Harper so aptly put it in the House the other day, the united opposition is doing nothing but scream

"The deficit is too high! Spend more! Spend more!"

The Liberals have been particularly hypocritical, with the farcical behaviour of that pompous, self-righteous phony Goodale the other day being a particular low point. Yet all they have to say with regard to what the Tories need to do is SPEND MORE MONEY!

[Jerry J. Fortin]

Isn't it safe to say that the Conservatives have the record on deficit spending? Isn't it safe to say that governments do not really control economies and that it makes no difference who is in power at any given time bad things happen when they happen?

[Smallc]

I think governments can influence economies, but you're right, they don't control them...and yes, recent Conservative governments have a habit of deficit spending.

[jdobbin]

Nor has your party. I'm not happy about the deficit. I wasn't happy about the whole incentice spending thing either. But as Harper so aptly put it in the House the other day, the united opposition is doing nothing but scream

"The deficit is too high! Spend more! Spend more!"

There was no one pushing the Tories to spend way above their election promises from 2006 to 2008. They did it themselves. Those budgets said they would restrict spending to rate of inflation and increase in population was supported by the Liberals. The Tories were the ones that breezed past those marks. Blaming the Liberals for that is just garbage.

The Parliamentary Budget Officer said Canada was headed for a deficit in 2009 simply based on Tory tax cuts and spending in 2008. He was dismissed for making such an outrageous statement. And this was all before a single stimulus dollar was spent.

The Liberals have been particularly hypocritical, with the farcical behaviour of that pompous, self-righteous phony Goodale the other day being a particular low point. Yet all they have to say with regard to what the Tories need to do is SPEND MORE MONEY!

The Liberals at least have a record of cutting spending. The present Tories, even when times as good, don't.

[Smallc]

He was dismissed for making such an outrageous statement.

I remeber that. I was one of the dismissers. That was back when I trusted the Prime Minster though.....

[Jerry J. Fortin]

There was no one pushing the Tories to spend way above their election promises from 2006 to 2008. They did it themselves. Those budgets said they would restrict spending to rate of inflation and increase in population was supported by the Liberals. The Tories were the ones that breezed past those marks. Blaming the Liberals for that is just garbage.

The Parliamentary Budget Officer said Canada was headed for a deficit in 2009 simply based on Tory tax cuts and spending in 2008. He was dismissed for making such an outrageous statement. And this was all before a single stimulus dollar was spent.

The Liberals at least have a record of cutting spending. The present Tories, even when times as good, don't.

Keep in mind that their focus was buying support to gain a majority. It hasn't worked and was focused on Atlantic Canada and Quebec to start with. Now under the current climate their focus is on the economic heartland of Ontario, Lots of votesd to buy up there, but it isn't working there either. Now the government has been pressured into reworking EI, not to the extent that opposition wanted but reworked nonetheless.

Once an election has been called, I am willing to bet that there is a lot of Western Canada spending, just to cement their position. Harper is very predictable.

[jdobbin]

Keep in mind that their focus was buying support to gain a majority.

Which they would have a hard time blaming the Liberals for. That is their own choice to overspend.

Once an election has been called, I am willing to bet that there is a lot of Western Canada spending, just to cement their position. Harper is very predictable.

It is happening already. Every day there is a new spending announcement. No one can keep up with it.

[Jerry J. Fortin]

Why not? The hole gets deeper everyday while the "government" attempts to keep its job. The Liberals would be doing the same thing. It is a sad state of affairs but that is the natural direction of Canadian politics.

I really wish someone had the guts to step out and make elections with fixed dates, introduce recall legislation, and create term limits for office. The career politician is what irks me the most living on the public dime. Next would be the patronage bestowed upon partisan supporters of the "winning faction". The nation is held to ransom with these things, managing or navigating through all the twists and turns diverts the governments attention from just administering the public system as they simply should be.